The rating agency Moody's late Thursday
downgraded 15 large banks and securities firms with international
reach, including Deutsche Bank, citing the escalating turmoil in
capital markets.
Moody's global banking managing director Greg Bauer said the firms
-- which include Bank of America, Goldman Sachs and JPMorgan Chase --
"have significant exposure to the volatility and risk of outsized
losses inherent to capital markets activities."
The list includes Barclays, Citigroup, Credit Suisse Group AG,
HSBC Holdings, Morgan Stanley, Royal Bank of Scotland Group, BNP
Paribas, Credit Agricole, Royal Bank of Canada, Societe Generale and
UBS AG, according to a statement on Moody's website.
Bauer emphasized that while the banks also provide important
"shock absorbers" through other business activities that help
mitigate capital market volatilities, "they also present unique risks
and challenges."
The steepest downgrade was to Credit Suisse, which dropped three
notches, from the second highest grade of Aa1 to the
still-respectable rating of A1.
Ten firms were downgraded by two notches, including Deutsche Bank.
Four firms were dropped only one notch.
Shares in Morgan Stanley, which operates the world's largest
brokerage, actually rallied on Wall Street because it was dropped
only two levels instead of the three-grade cut that Moody's had said
was possible, according to Bloomberg news service.
A reduced credit rating can make borrowing money more difficult
and expensive. Among the banks downgraded on Thursday were US firms
that benefited from the emergency 2008 federal government bailout
amid the worst US financial crisis since the Great Depression.
Profits have faded more recently for large international banks as
the eurozone's financial crisis escalates.
